The supervisory mission by members of the International Monetary Fund (IMF), European Central Bank (ECB) and European Commission arrived in Athens again. The purpose of the visit is an extensive review of the activities of various ministries, through which the auditors have to assure themselves personally to what extent the fiscal consolidation of the budget was applied in the recent months. International financial experts will verify whether the measures for economic rehabilitation of Greece are applied in practice.
The main concern today is how much the government managed to reduce the uncovered liabilities to insurance funds, the ultimate goal being a cut amounting to 540 million Euros. Another 300 million Euros of the penalties imposed for breach of employment and social relations are expected to be provided for the Treasury. In other words, auditors will examine what are the results of the government acts in finding and punishing unfair employers who have acted in violation of labor laws for years and have not paid mandatory health and retirement insurances to their employees.
The representatives of the IMF, the ECB and European Commission will examine how the reduction of pharmaceutical costs and the introduction of a unified information system for the issuance of prescriptions in the country go on in the health ministry. The reforms in the health insurance sector are crucial, because as it turned out after the first inspection at the beginning of the year the health system in Greece is the black hole in government finances. The goals there are to save about one billion Euros of pharmaceutical expenditures this year and another 1.1 billion Euros from the introduction of the unified information system that has to make the process of issuing prescriptions more transparent.
Another problem are government hospitals, which are financially inefficient according to the supervisors. Financial experts say that we can talk about corrupt practices in the current way of public hospitals managing, in tenders for drug suppliers and the management of granted state subsidies. There are talks about corruption and lack of transparency in the system of local authority and government from which the government of PASOK must save around 3.4 billion Euros this year. The first step was to vote the new Kalikratis law which tailored the municipal map of Greece, merging administratively municipalities and regions in order to maximize state funding.
According to data of the Ministry of Finance the government has reduced the deficit by about 40% for the first five months of 2010. However, Greece should follow the planned program and the restrictions provided in it for the amount of public spending. Budget spending should not exceed 34 billion Euros by the end of June, which will most likely be met, because less than 26 billion Euros have been spent until May this year. However, Greece can not spend more than 67 billion Euros for the whole year.
Not to go beyond the planned limits, the government should hurry up and adopt the new social security law by the end of June as well as the law for introduction of new standards in the Audit Office. It must also complete the transfer of control of social security funds to the Bank of Greece. The government will have to take care to complete the process of forming an independent statistical agency and to submit the new draft law on gambling, and to complete the reforms in tax administration. Other priorities are the submission of the new rescue plan for the state railways, which recorded a deficit of one billion Euros, and the initiation of negotiations between the employers’ organizations and unions’ representatives for change in the legal labor relations and the level of wages in the country.
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